If you are buying a condo, you will probably encounter the term “status certificate”.
What exactly is a status certificate and why are status certificates important?
Think of a status certificate as a comprehensive document that provides information about the current state of a condominium property. The purpose of it is to give potential buyers as much information as possible about their unit and the overall health of the operations of the condo complex.
What Information Can I Get From A Status Certificate?
A condo unit is typically subject to additional rules and regulations compared to a (freehold) house because it’s managed by a Board of Directors and often a property manager.
The condo board is responsible for managing the budget for the overall condo, which includes upkeep, repairs and improvements to the common elements on the property. Common elements are typically anything outside of your unit such as elevators, lobby, amenity facilities, etc. For this reason, you’ll want to make sure that the condo board is fiscally responsible and can handle necessary repairs that come up now and in the future.
That’s where the status certificate comes in. The status certificate is a recent collection of relevant information such as the condos by-laws (rules about things like pets, fitness facilities, swimming pools, barbecues, smoking, etc.), a current budget for the condominium, a recent reserve study (we’ll talk about that in a moment), and whether any lawsuits may be pending against the condo.
With this information at-hand, a status certificate can help you make your purchase decision and anticipate any issues such as:
• Anticipated increases in maintenance fees
• Any major future repairs you may be liable for a share of
• The overall financial health of the condo
• Any special assessments that may be costly down the road
Where Do I Get Status Certificates?
You or your Real Estate agent can order a condo corporation’s status certificate. All you have to do is submit a written request and pay the $100 fee (plus HST) to management or the condo corporation.
It takes about 10 days, although it can be rushed for an additional fee.
Is it Mandatory to Get a Status Certificate?
Typically, when buying a resale condo, your real estate agent will recommend that you obtain a copy of the status certificate and thoroughly review it with your real estate lawyer before you commit to a purchase.
Most offers on resale condos are conditional upon review of the condo status certificate, so that buyers can ensure everything is in order.
If you are getting a mortgage or refinancing your mortgage on a condo property, your lender will require a status certificate be obtained and reviewed by a lawyer as a condition of the mortgage.
How Do I Review the Status Certificate?
Status certificates can often be complex and contain key information within dozens of pages, we recommend having an experienced Real Estate lawyer review the status certificate for you. A lawyer will know the key information to look for, how to interpret the information and will typically summarize the key points and what you should be aware of.
What is a Typical ‘Deal Breaker’ That Can Be Found in a Status Certificate?
Condos carry a monthly maintenance fee to pay for common expenses are shared between all owners. If the condo corporation is running short of funds to pay operation expenses, you will notice an increase to your maintenance fees. While some increases may be reasonable, in some circumstances, when reviewing the status certificate is a condition of your offer to purchase, a sharp increase to maintenance fees may not be within your budget and you may decide to not proceed with buying the unit.
Another major item that can be found by reviewing the status certificate is called a special assessment. A special assessment is an additional charge that condominium owners are required to pay on top of their regular monthly maintenance fees. While all owners are responsible for paying a special assessment, it’s important to realize that the condo board of directors does not need to get the approval of individual owners to add a special assessment. For example, if the condo has an urgent requirement to repair the roof at a cost of $500K and does not have sufficient funds in the reserve to cover the cost, each unit may have a special assessment put against it, which means you and other unit owners are liable for your share of the cost of repairs.
Under Ontario law, there’s very little owners can do if they can’t pay or disagree with a special assessment. If an owner can’t pay, the condominium corporation can put a lean on the property.
Keep in mind that reviewing status certificates will only highlight any issues at the current time but does not guarantee against having condo fee increases or special assessments in the future.
Can Deeded Help With My Status Certificate?
Of course! As you are shopping for a condo unit, we’d be happy to connect you with one of our independent real estate lawyers review the status certificate for your property and provide you with a comprehensive, yet understandable summary. Please feel free to contact us anytime.